Teck, CP hammer out transport deal

CANADIAN producer Teck Resources has signed a 10-year deal with Canadian Pacific Railway for the transport of coal from five of its operations to Vancouver ports.
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Courtesy Canadian Pacific Railway

Donna Schmidt

Teck president Don Lindsay said the agreement provided it with certainty to realize its growth strategy, and would help it provide timely deliveries of increased production to key markets.

The producer did not disclose financial details or which mines were included, but did confirm the confidential deal would commence April 1 next year.

‘The agreement reflects the companies' commitment to work together to achieve growth in the volume of coal shipped through a range of economic and marketplace dynamics and provides for flexibility over the long term [and] provides for investments by CP that enhance coal handling capacity to provide for Teck's volume growth,” he said.

CP president Fed Green said the decade-long collaborative deal sets a foundation for both companies.

"Our ongoing dialogue has provided new and deeper insight into Teck's growth objectives,” he said.

“Importantly, the agreement provides the stability and confidence to grow our business and enhance this world-class supply chain for our mutual benefit."

Teck said last month that temporary capacity constraints at the Westshore Terminals would cut into its third-quarter pricing and sales guidance.

Coal sales, initially projected for the third period to be in the range of 5.8-6.2Mt, are now expected to be 5.2-5.5Mt.

Sales for the calendar year are now anticipated to total 23.0-23.8Mt, versus its previous guidance range of 23.5-24.5Mt.

The producer has begun talks with Westshore regarding the shipment shortfall and possible measures that can be taken to alleviate the issue.

While Westshore has advised the company that its port improvements are expected to permit it to load all Teck’s expected deliveries in 2011, Teck is meanwhile working to mitigate the impact.

One of these methods included diverting shipments to Neptune Bulk Terminals Canada, where it holds a 46% interest, as well as the Ridley Terminals in Prince Rupert.

The company also has completed fourth-quarter negotiations with most of its traditional Pacific and Atlantic region customers with pricing at about $C209 per tonne for the top quality brand. The pricing for other brands is in line with the market for similar product.